JUNE 23, 1997

...but the F1 float is wobbling

THE flotation of Bernie Ecclestone's Formula One Holdings Ltd. looks likely to be delayed for some months because of worries in financial circles that Ecclestone and his financial advisors, the New York-based Salomon Brothers investment bank, are rushing things a little too much.

Financial advisors are worried that there are too many question marks still to be answered. Formula One Holdings has no major assets beyond a bundle of lucrative contracts. The company's ownership is less than solid with negotiations still going on between Ecclestone and the F1 teams over how much equity they want in the floated company. Ecclestone has been trying to get team bosses to agree to long-term commitments if they want a share in the company, but some are not cooperating.

There are question marks over the FIA's right to centrally-market its TV rights. This has been challenged in the obscure world of truck racing but there are worries - however unlikely - that a similar decision could be made over F1's TV rights, which would demolish any flotation.

Investors are also eager to discover more about the role of the international automobile federation - which would get 10% of the share in the company in exchange for an agreement that FOH should have the commercial rights to F1 for the next 25 years. There are questions over this agreement as no other promotion companies had the chance to bid for the deal. The banks are worried that the cozy relationship between Ecclestone and the FIA might be judged a cartel in a commercial court. Ecclestone is both the FIA Vice-President responsible for promotion and the F1 "commercial rights holder". Bernie has to be elected - on the proposal of the FIA President - to the first role but there are no published FIA regulations which explain how the commercial rights holder is selected and no regulations restricting an appointment. These may exist in the Concorde Agreement - but the latest versions of this have never been made available to the public.

Any decisions taken by the FIA President are, in theory, subject to the agreement of the FIA General Assembly - the sovereign body of the federation. The President does not have to answer for decisions automatically, unless he is called upon to do so.

On of the biggest worries is that everything seems to be happening too fast for the conservative financial world which wants to know why Ecclestone is so keen to float the company before it begins to produce the promised revenues from pay-per-view television.

There is no question that the whole of the F1 world wants the flotation to go ahead in order to guarantee the long-term future of the sport. Ecclestone is 67 years old in October and team bosses are worried about what might happen if he was no longer able to run the business.

There is pressure too from Salomon Brothers who are hoping to use the F1 flotation as a way of launching themselves as a big player in the European equity markets. There were also hopes to use the British GP as a springboard for the flotation, the coverage whipping up enthusiasm for the shares.

The only other possible explanation for the rush is that Ecclestone and his advisors are working to get something done before a self-imposed deadline. The only obvious change which might take place is that the FIA may elect a new President. This is unlikely - Mosley says he intends to stand for another four-year term - but any new FIA President could make life a lot more difficult for Ecclestone.